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UK finance minister to reassure markets

27 Jun, 2016 9:40am

2 minutes to read

George Osborne, a close political ally of Cameron and one-time frontrunner to succeed him, has not made a public statement since the result beyond a series of tweets on Friday to say central banks had taken steps to ensure adequate market liquidity. Photo / AP

British finance minister George Osborne will seek to reassure financial markets later today following the country's decision to leave the European Union last week, setting out the government's economic response to the vote in a statement at 0600 GMT (6pm NZT).

Global stock markets lost about US$2 trillion in value on Friday after Britain voted to leave the EU, while sterling suffered a record one-day plunge to a 31-year low and money poured into safe-haven gold and government bonds.

"The Chancellor (Osborne) will make a statement tomorrow morning (UK time) to provide reassurance about financial and economic stability in light of the referendum result," a Treasury spokesman said in a statement.

The statement would set out "the actions that he and the rest of the government will be taking to protect the national interest over the coming period," the spokesman said.

The vote has unleashed political, as well as financial turmoil, prompting Prime Minister David Cameron to say he will resign, 11 senior members of the opposition Labour Party to withdraw support for leader Jeremy Corbyn and raising the prospect of a fresh Scottish independence bid.

Osborne, a close political ally of Cameron and one-time frontrunner to succeed him, has not made a public statement since the result beyond a series of tweets on Friday to say central banks had taken steps to ensure adequate market liquidity.

In his absence, Britain's credit rating outlook has been downgraded by Moody's, economists have slashed their growth outlook for the British economy and banks have forecast an extended period of volatility for sterling.

A Reuters poll of economists on Friday showed that the result could drive the economy into recession and will force the Bank of England (BoE) to ease its already ultra-loose monetary policy further.

Markets have priced in a growing chance of a rate cut later this year.